David Moenning's Daily State of the Markets: 10/25
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In With the New
Wall Street gave a big welcome to Ben Bernanke yesterday after it was announced that the former Fed Governor, Princeton Professor, and current chairman of the President�s Council of Economic Advisors would replace Alan Greenspan as the new chairman of the FOMC at the end of January. Mr. Bernanke was the odds-on favorite for the job and traders gave his nomination a big thumbs-up by buying with both hands. The Dow�s 170 point gain was the best showing in six months and was mirrored by the major indices across the board. Although volume was a bit light considering the advance, this follow-through move confirms that the bulls are clearly in control of the ball at the present time.
And although the markets like the fact that Bernanke is widely seen as someone who is likely to fight inflation and continue Greenspan�s policies, another factor in yesterday�s rise had to do with Refco�s demise. With an auction for the scandal ladened firm scheduled for later this week, it is likely that all of the forced liquidation of positions held by the company has been completed. One look at the action in leaders, such as the oil issues, makes this point clear.
Unfortunately for the bulls however, the easy part of the rally is now over. It is normal for the market to retrace a portion of a correction once a bottom has been put in. Yesterday�s rally took the S&P back up to a common retracement level, so now with the index bumping into resistance and the 200 day moving average, the real work begins.
Turning to this morning, after yesterday�s Bernanke party, its back to basics for the markets. With about one-third of the S&P 500 constituents reporting earnings this week, all eyes will continue to be fixed on the reports. And regardless of whether you want to put the profit taking tag on the action or blame it on Texas Instrument�s earnings guidance, the fact is that stocks are pointing lower this morning. In addition, oil is trading higher by +$0.38 to $60.70 and bond yields are steady at 4.44%. So with stocks in a confirmed rally mode at the moment it will be important to watch how the market reacts as it bumps its head on resistance.
Stocks "In Play" This Morning:
Texas Inst (NYSE: TXN) � Beat estimates by $0.01 but disappointed on outlook
Brinker (NYSE: EAT) � Reported $0.50 vs. $0.47
BellSouth (NYSE: BLS) � To repurchase $2B in stock
Northrop Grumman (NYSE: NOC) � Q3 EPS reported at $0.80 vs. $0.69
Lockheed Martin (NYSE: LMT) � Reported $0.96 vs. $0.90
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: TXN, LMT
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
Wall Street gave a big welcome to Ben Bernanke yesterday after it was announced that the former Fed Governor, Princeton Professor, and current chairman of the President�s Council of Economic Advisors would replace Alan Greenspan as the new chairman of the FOMC at the end of January. Mr. Bernanke was the odds-on favorite for the job and traders gave his nomination a big thumbs-up by buying with both hands. The Dow�s 170 point gain was the best showing in six months and was mirrored by the major indices across the board. Although volume was a bit light considering the advance, this follow-through move confirms that the bulls are clearly in control of the ball at the present time.
And although the markets like the fact that Bernanke is widely seen as someone who is likely to fight inflation and continue Greenspan�s policies, another factor in yesterday�s rise had to do with Refco�s demise. With an auction for the scandal ladened firm scheduled for later this week, it is likely that all of the forced liquidation of positions held by the company has been completed. One look at the action in leaders, such as the oil issues, makes this point clear.
Unfortunately for the bulls however, the easy part of the rally is now over. It is normal for the market to retrace a portion of a correction once a bottom has been put in. Yesterday�s rally took the S&P back up to a common retracement level, so now with the index bumping into resistance and the 200 day moving average, the real work begins.
Turning to this morning, after yesterday�s Bernanke party, its back to basics for the markets. With about one-third of the S&P 500 constituents reporting earnings this week, all eyes will continue to be fixed on the reports. And regardless of whether you want to put the profit taking tag on the action or blame it on Texas Instrument�s earnings guidance, the fact is that stocks are pointing lower this morning. In addition, oil is trading higher by +$0.38 to $60.70 and bond yields are steady at 4.44%. So with stocks in a confirmed rally mode at the moment it will be important to watch how the market reacts as it bumps its head on resistance.
Stocks "In Play" This Morning:
Texas Inst (NYSE: TXN) � Beat estimates by $0.01 but disappointed on outlook
Brinker (NYSE: EAT) � Reported $0.50 vs. $0.47
BellSouth (NYSE: BLS) � To repurchase $2B in stock
Northrop Grumman (NYSE: NOC) � Q3 EPS reported at $0.80 vs. $0.69
Lockheed Martin (NYSE: LMT) � Reported $0.96 vs. $0.90
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: TXN, LMT
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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